Lakeland Industries, Inc. EXHIBIT 10(k)
Employment Agreement
This agreement ("Agreement") has been entered into this 29th day of
November 2002, by and between Lakeland Industries, Inc., a Delaware corporation
("Company"), and Christopher J. Ryan, and individual ("Executive").
IT IS AGREED AS FOLLOWS:
SECTION 1: DEFINITIONS AND CONSTRUCTION.
1.1 DEFINITIONS. For purposes of this Agreement, the following words
and phrases, whether or not capitalized, shall have the meanings
specified below, unless the context plainly requires a different
meaning.
1.1 (a) "ACCRUED COMPENSATION" has the meaning set forth in Section
4.5 of this Agreement.
1.1 (b) "ACCRUED OBLIGATIONS" has the meaning set forth in Section
4.1 (a) of this Agreement.
1.1 (c) "ANNUAL BASE SALARY" has the meaning set forth in Section 2.4
(a) of this Agreement.
1.1 (d) "BOARD" means the Board of Directors of the Company.
1.1 (e) "CAUSE" has the meaning set forth in Section 3.3 of this
Agreement.
1.1 (f) "CHANGE IN CONTROL" means:
(i) The acquisition by any individual, entity or group, or a
Person (within the meaning of Section 13 (d) (3) or 14 (d) (2) of
the Exchange Act) of ownership of 30% or more of either (a) the
then outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or (b) the combined voting
power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors (the
"Outstanding Company Voting Securities"); or
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(ii) Individuals who, as the date hereof, constitute the Board
(the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date hereof
whose election, or nomination for election by the Company's
stockholders, was approved by a vote of at least a majority of
the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the
Incumbent Board, but excluding, as a member of the Incumbent
Board, any such individual whose initial assumption of office
occurs as a result of either an actual or threatened election
contest (as such terms are used in Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act) or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person
other than the Board; or
(iii) Approval by the stockholders of the Company of a
reorganization, merger or consolidation, in each case, unless,
following such reorganization, merger or consolidation, (a) more
than 50% of, respectively, the then outstanding shares of common
stock of the corporation resulting from such reorganization,
merger or consolidation and the combined voting power of the then
outstanding voting securities of such corporation entitled to
vote generally in the election of directors is then beneficially
owned, directly or indirectly, by all or substantially all of the
individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities immediately prior to such
reorganization, merger or consolidation in substantially the same
proportions as their ownership, immediately prior to such
reorganization, merger or consolidation, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities,
as the case may be, (b) no Person beneficially owns, directly or
indirectly, 30% or more of, respectively, the then outstanding
shares of common stock of the corporation resulting from such
reorganization, merger or consolidation or the combined voting
power of the then outstanding voting securities of such
corporation, entitled to vote generally in the election of
directors and (c) at least a majority of the members of the board
of directors of the corporation resulting from such
reorganization, merger or consolidation were members of the
Incumbent Board at the time of the execution of the initial
agreement providing for such reorganization, merger or
consolidation; or
(iv) Approval by the stockholders of the Company of (a) a
complete liquidation or dissolution of the Company or (b) the
sale or other disposition of all or substantially all of the
assets of the
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Company, other than to a corporation, with respect to which
following such sale or other disposition, (1) more than 50% of,
respectively, the then outstanding shares of common stock of such
corporation and the combined voting power of the then outstanding
voting securities of such corporation entitled to vote generally
in the election of directors is then beneficially owned, directly
or indirectly, by all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such sale or other disposition in
substantially the same proportion as their ownership, immediately
prior to such sales or other disposition, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities,
as the case may be, (2) no Person beneficially owns, directly or
indirectly, 30% or more of, respectively, the then outstanding
shares of common stock of such corporation and the combined
voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of
directors and (3) at least a majority of the members of the board
of directors of such corporation were members of the Incumbent
Board at the time of the execution of the initial agreement or
action of the Board providing for such sale or other disposition
of assets of the Company.
1.1 (g) "COMPANY" has the meaning set forth in the first paragraph of
this Agreement and, with regard to successors, in Section 6.2 of this
Agreement.
1.1 (h) "CODE" shall mean the Internal Revenue Code of 1986, as
amended.
1.1 (i) "CURRENT TARGET BONUS" has the meaning set forth in Section 4.
(a) of this Agreement.
1.1 (j) "DATE OF TERMINATION" has the meaning set forth in Section 3.6
of this Agreement.
1.1 (k) "DISABILITY" has the meaning set forth in Section 3.2 of this
Agreement.
1.1 (l) "DISABILITY EFFECTIVE DATE" has the meaning set forth in
Section 3.2 of this Agreement.
1.1 (m) "DISPOSITION OF A MAJOR PART" means:
(i) when used with reference to the stock of an Operating Line of
Business that is or becomes a separate corporation, limited
liability
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corporation, partnership or other business entity, the sale,
exchange, transfer, distribution or other disposition of the
ownership, either beneficially or of record or both, by the
Company of more than 50% of either (a) the then outstanding
shares of common stock (or the equivalent equity interests) of
such Operating Line of Business, or (b) the combined voting power
of the then outstanding voting securities of such Operating Line
of Business entitled to vote generally in the election of the
Board or the equivalent governing body of the Operating Line of
Business;
(ii) when used with reference to the merger or consolidation of
an Operating Line of Business that is or becomes a separate
corporation, limited liability corporation, partnership or other
business entity, any such transaction that results in the Company
owning, either beneficially or of record or both, less that 50%
of either (a) the then outstanding shares of common stock (or the
equivalent equity interests) of such Operating Line of Business,
or (b) the combined voting power of the then outstanding voting
securities of such Operating Lines of Business entitled to vote
generally in the election of the Board or the equivalent
governing body of the Operating Line of Business; or
(iii) when used with reference to the assets of an Operating Line
of Business, the sale, exchange, transfer, liquidation,
distribution or other disposition of assets of such Operating
Line of Business (a) having a fair market value (as determined by
the Incumbent Board) aggregating more than 50% of the aggregate
fair market value of all of the assets of such Operating Line of
Business as of the Triggering Transaction Date, (b) accounting
for more than 50% of the aggregate book value (net of
depreciation and amortization) of all of the assets of such
Operating Line of Business, as would be shown on a balance sheet
for such Operating Line of Business, prepared in accordance with
generally accepted accounting principles then in effect, as of
the Triggering Transaction Date; or (c) accounting for more than
50% of the net income of such Operating Line of Business, as
would be shown on an income statement, prepared in accordance
with generally accepted accounting principles then in effect, for
the 12 months ending on the last day of the month immediately
preceding the month in which the Triggering Transaction Date
occurs.
1.1 (n) "EFFECTIVE DATE" means the date of this Agreement.
1.1 (o) "EMPLOYMENT PERIOD" means the period beginning on the
Effective Date and ending on the later of (i) January 31, 2006, or
(ii) January 31 of any succeeding fiscal year during which notice is
given by
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either party (as described in Section 1.1 (dd) of this Agreement) of
such party's intent not to renew this Agreement.
1.1 (p) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
1.1 (q) "EXCISE TAX" has the meaning set forth in Section 4.2 (e) of
this Agreement.
1.1 (r) "GOOD REASON" has the meaning set forth in Section 3.4 of this
Agreement.
1.1 (s) "GROSS-UP PAYMENT" has the meaning set forth in Section 4.2
(i) of this Agreement.
1.1 (t) "INCENTIVE BONUS" has the meaning set forth in Section 2.4 (b)
of this Agreement.
1.1 (u) "NOTICE OF TERMINATION" has the meaning set forth in Section
3.5 of this Agreement.
1.1 (w) "OPERATING LINES OF BUSINESS" means the following lines of
business of the Company, whether operated as a division or as a
separate subsidiary: (i) provides disposable and woven protective
apparel and accessory items manufacturing and marketing, which
manufactures and sell uniforms, gloves, chemical suits, fire turnout
and aluminized fire protective apparel, PVC aprons, medical disposable
gowns and all nature of safety apparel to a wide variety of
distributors, institutions and businesses in the United States, Canada
and internationally.
1.1 (x) "OTHER BENEFITS" has the meaning set forth in Section 4.1 (d)
of this Agreement.
1.1 (y) "OUTSTANDING COMPANY COMMON STOCK" has the meaning set forth
in Section 1.1 (f) (i) of this Agreement.
1.1 (z) "OUTSTANDING COMPANY VOTING SECURITIES" has the meaning set
forth in Section 1.1 (f) (i) of this Agreement.
1.1 (aa) "PAYMENT" has the meaning set forth in Section 4.2 (e) of
this Agreement
1.1 (bb) "PERSON" has the meaning set forth in Sections 13 (d) and 14
(d) of the Exchange Act.
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1.1 (cc) "SUPPLEMENTAL PLAN" has the meaning set forth in Section 4.2
(e) of this Agreement.
1.1 (dd) "TERM" means the period that begins on the Effective Date and
ends on the earlier of: (i) the Date of Termination as defined in
Section 3.6 of this Agreement, or (ii) the close of business on the
later of January 31,2006 or January 31 of any renewal term as set
forth in Section 2.1 of this Agreement.
1.1 (ee) "TRIGGERING TRANSACTION" means (i) a Change of Control of the
Company or (ii) a Disposition of a Major Part of two or more of the
Company's Operating Lines of Business.
1.1 (ff) "TRIGGERING TRANSACTION DATE" shall mean the date of the
Triggering Transaction.
1.2 GENDER AND NUMBER. When appropriate, pronouns in this Agreement
used in the masculine gender include the feminine gender, words in the singular
include the plural, and words in the plural include the singular.
1.3 HEADINGS. All headings in this Agreement are included solely for
ease of reference and do not bear on the interpretation of the text.
Accordingly, as used in this Agreement, the terms "Article" and "Section" mean
the text that accompanies the specified Article and Section of the Agreement.
1.4 APPLICABLE LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York without reference to its
conflict of law principles.
SECTION 2: TERMS AND CONDITIONS OF EMPLOYMENT.
2.1 PERIOD OF EMPLOYMENT. The Executive shall remain in the employ of
the Company throughout the Term of this Agreement in accordance with the terms
and provisions of this Agreement. This Agreement will automatically renew for
two year periods unless either party gives the other written notice, by October
28, 2005, or October 28 of any succeeding year, of such party's intent not to
renew this Agreement.
2.2 POSITIONS AND DUTIES.
2.2 (a) Throughout the Term of this Agreement, the Executive shall
serve as a Director of the Board and Executive Vice President, General
Counsel and Secretary of the Company, subject to reasonable directions
and nominations of the Board. The Executive shall have such authority
and shall perform such duties as are specified by the By-laws of the
Company for the office to which he has been appointed hereunder and
shall so serve, subject to the control exercised by the Board from
time to time.
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Additionally, each year throughout the Term of the Executive's service
as a Director, the Executive shall be nominated to serve as member of
the Board.
2.2 (b) Throughout the Term of this Agreement (but excluding any
periods of vacation and sick leave to which the Executive is
entitled), the Executive shall devote reasonable attention and time
during normal business hours to the business and affairs of the
Company and shall use his reasonable best efforts to perform
faithfully and efficiently such responsibilities as are assigned to
him under or in accordance with this Agreement; provided that, it
shall not be a violation of this paragraph for the Executive to (i)
serve on corporate, civic or charitable boards or committees, (ii)
deliver lectures or fulfill speaking engagements, or (iii) manage
personal investments, so long as such activities do not significantly
interfere with the performance of the Executive's responsibilities as
an employee of the Company in accordance with this Agreement or
violate the Company's conflict of interest policy as in effect
immediately prior to the Effective Date.
2.3 SITUS OF EMPLOYMENT. Throughout the Term of this Agreement, the
Executive's services shall be performed at the location where the Executive was
employed immediately prior to the Effective Date, or any office of the Company
which is located in the greater Long Island areas. It is understood and agreed
by the Executive that the Executive will be required at the discretion of the
Board of Directors, to engage in substantial business travel.
2.4 COMPENSATION.
2.4 (a) ANNUAL BASE SALARY. For the first year within the Term of
this Agreement, the Executive shall receive an annual salary
("Annual Base Salary") of ($241,000), between January 31, 2003
and January 31, 2004; $270,000 between January 31, 2004 and
January 31, 2005; $302,000 between January 31, 2005 and January
31, 2006 which shall be paid in equal or substantially equal
semi-monthly installments. During the Term of this Agreement, the
Annual Base Salary payable to the Executive shall be reviewed at
least annually and shall be increased at the discretion of the
Board or the Compensation Committee of the Board but shall not be
reduced.
2.4(b) INCENTIVE BONUSES. In addition to Annual Base Salary, the
Executive shall be awarded the opportunity to earn an incentive
bonus on an annual basis ("Incentive Bonus") under an incentive
compensation plan which equals $1450.00 for each penny of
additional after tax earnings incrementally earned over the prior
year's fiscal earnings, which shall be calculated from the
Company's certified audited financial statements. During the Term
of this Agreement, the annual target Incentive Bonus which the
Executive will have the opportunity to earn shall be reviewed at
least annually and be increased at the discretion of the Board or
the Compensation Committee of the Board, but in no case shall
such target
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annual Incentive Bonus which the Executive will have the
opportunity to earn be reduced below Twenty Thousand Dollars
($20,000).
2.4 (c) INCENTIVE, SAVINGS AND RETIREMENT PLANS. Throughout the
Term of this Agreement, the Executive shall be entitled to
participate in all incentive, savings and retirement plans
generally available to other peer executives of the Company.
2.4 (d) WELFARE BENEFIT PLANS. Throughout the Term of this
Agreement (and thereafter, subject to Sections 4.1 (c) hereof),
the Executive and /or the Executive's family, as the case may be,
shall be eligible for participation in and shall receive all
benefits under welfare benefit plans, practices, policies and
programs provided by the Company (including, without limitation,
medical, prescription, dental, disability, salary continuance,
employee life, group life, accidental death and travel accident
insurance plans and programs) to the extent generally available
to other peer executives of the Company. As it affects Sections
2.4(c) and 2.4(d) above, the Company shall always have the right
to alter its benefit plan providers.
2.4 (e) EXPENSES. Throughout the Term of this Agreement, the
Executive shall be entitled to receive prompt reimbursement for
all reasonable expenses incurred by the Executive in accordance
with the policies, practices and procedures generally applicable
to other peer executives of the Company. The Executive agrees to
submit receipts and or vouchers in support of all requests for
reimbursement.
2.4 (f) FRINGE BENEFITS. Throughout the Term of this Agreement,
the Executive shall be entitled to an automobile allowance of
$4000.00 annually and term life insurance of $500,000 paid by the
Company. Executive agrees to be solely responsible for any and
all federal, state and local taxes owning as a result of such
term life insurance being provided.
2.4 (g) VACATION. Throughout the Term of this Agreement, the
Executive shall be entitled to paid vacation for four (4) weeks
each year.
SECTION 3: TERMINATION OF EMPLOYMENT
3.1 DEATH. The Executive's employment shall terminate automatically
upon the Executive's death during the Employment Period.
3.2. DISABILITY. If the Company determines in good faith that the
Disability of the Executive has occurred during the Employment Period (pursuant
to the definition of Disability set forth below), the Company may give to the
Executive written notice in accordance with Section 7.2 of its intention to
terminate the Executive's employment. In such event, the Executive's employment
with the Company shall terminate effective on the thirtieth (30th) day after
receipt of such notice by the Executive (the "Disability Effective Date"),
provided that,
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within the thirty (30) days after such receipt, the Executive shall not have
returned to full-time performance of the Executive's duties. For purposes of
this Agreement, "Disability" shall mean that the Executive has been unable to
perform the services required of the Executive hereunder on a full-time basis
for a period of one hundred eighty (180) consecutive business days by reason of
a physical and/or mental condition. "Disability" shall be deemed to exist when
certified by a physician paid for and selected by the Company and acceptable to
the Executive or the Executive's legal representative (such agreement as to
acceptability not to be withheld unreasonably). The Executive will submit to
such medical or psychiatric examinations and tests as such physician deems
necessary to make any such Disability determination.
3.3 TERMINATION FOR CAUSE. The Company may terminate the Executive's
employment during the Employment Period for "Cause", which shall mean
termination based upon: (i) the Executive's willful and continued failure to
substantially perform his duties with the Company (other than as a result of
incapacity due to physical or mental condition), after a written demand for
substantial performance is delivered to the Executive by the Company, which
specifically identifies the manner in which the Executive has not substantially
performed his duties, (ii) the Executive's commission of an act constituting a
criminal offense involving moral turpitude, dishonesty, or breach of trust, or
(iii) the Executive's material breach of any provision of this Agreement. For
purposes of this Section, no act, or failure to act on the Executive's part
shall be considered "willful" unless done, or omitted to be done, without good
faith and without reasonable belief that the act or omission was in the best
interest of the Company. Notwithstanding the foregoing, the Executive shall not
be deemed to have been terminated for Cause unless and until (i) he receives a
Notice of Termination from the Company, (ii) he is given the opportunity, with
counsel to be heard before the Board, and (iii) the Board finds, in its good
faith opinion, the Executive was guilty of the conduct set forth in the Notice
of Termination.
3.4 GOOD REASON. The Executive may terminate his employment with the
Company for "Good Reason", which shall mean:
3.4 (a) the assignment to the Executive of any duties inconsistent in
any respect with the Executive's position (including status, offices,
titles and reporting requirements), authority, duties or
responsibilities as contemplated by Section 2.2 (a) or any other
action by the Company which results in a material diminution in such
position, authority, duties or responsibilities, excluding for this
purpose any action not taken in bad faith and which is remedied by the
Company promptly after receipt of notice thereof given by the
Executive;
3.4 (b) (i) in the event of and after the occurrence of a Triggering
Transaction, the failure by the Company to continue in effect any
benefit or compensation plan, stock ownership plan, life insurance
plan, health and accident plan or disability plan to which the
Executive is entitled as specified in Section 2.4, (ii) the taking of
any action by the Company which would adversely affect the Executive's
participation in, or materially reduce the Executive's benefits under,
any plans described in Section 2.4, or
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deprive the Executive of any material fringe benefit enjoyed by the
Executive as described in Section 2.4 (f), or (iii) the failure by the
Company to provide the Executive with paid vacation to which the
Executive is entitled as described in Section 2.4 (g).
3.4 (c) in the event of and after the occurrence of a Triggering
Transaction, the Company's requiring the Executive to be based at any
office or location other than that described in Section 2.3;
3.4 (d) a material breach by the Company of any provision of this
Agreement; Such breach by the Company shall require Executive to
provide the Company a written notice describing with specificity the
nature of the contractual breach and the Company shall have 30 days to
cure such breach.
3.4 (e) any purported termination by the Company of the Executive's
employment otherwise than as expressly permitted by this Agreement; or
3.4 (f) within a period ending at the close of business on the date
one (1) year after the Triggering Transaction Date of any Change in
Control, if the Company has failed to comply with and satisfy Section
6.2 on or after such Triggering Transaction Date.
For purposes of this Section, any good faith determination of "Good
Reason" made by the Executive shall be conclusive.
3.5 NOTICE OF TERMINATION. Any termination by the Company for Cause or
Disability, or by the Executive for Good Reason, shall be communicated by Notice
of Termination to the other party, given in accordance with Section 7.2. For
purposes of this Agreement, a "Notice of Termination" means a written notice
which (i) indicates the specific termination provision in this Agreement relied
upon, (ii) to the extent applicable, sets forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated, and (iii) if the Date of
Termination (as defined in Section 3.6 hereof) is other than the date of receipt
of such notice, specifies the termination date (which date shall be not more
than thirty (30) days after the giving of such notice). The failure by the
Executive or the Company to set forth in the Notice of Termination any fact or
circumstance which contributes to a showing of Good Reason or Cause shall not
waive any right of the Executive or the Company hereunder or preclude the
Executive or the Company from asserting such fact or circumstance in enforcing
the Executive's or the Company's rights hereunder.
3.6 DATE OF TERMINATION. "Date of Termination" means (i) if the
Executive's employment is terminated by the Company for Cause, or by the
Executive for Good Reason, the Date of Termination shall be the date of receipt
of the Notice of Termination or any later date specified therein, as the case
may be, (ii) if the Executive's employment is terminated by reason of death or
Disability, the Date of Termination shall be the date of death of the Executive
or the Disability Effective Date, as the case may be, or (iii) if the
Executive's
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employment is terminated by the Company other than for Cause, death, or
Disability, the Date of Termination shall be the date of receipt of the Notice
of Termination; provided that if within thirty (30) days after any Notice of
Termination is given, the party receiving such Notice of Termination notifies
the other party that a dispute exists concerning the termination, the Date of
Termination shall be the date on which the dispute is finally determined, either
by mutual written agreement of the parties, or by a final judgment, order or
decree of a court of competent jurisdiction (the time for appeal therefrom
having expired and no appeal having been perfected).
SECTION 4: CERTAIN BENEFITS UPON TERMINATION.
4.1 TERMINATION WITHOUT CAUSE OR FOR GOOD REASON NOT IN CONNECTION
WITH A TRIGGERING TRANSACTION. If, prior to a Triggering Transaction during the
Employment Period (except in the event that one of the following terminations of
employment occurs within the six-month period prior to the earlier of (a) a
Triggering Transaction or (b) the execution of a definitive agreement or
contract that eventually results in a Triggering Transaction, which shall result
in the payment of severance benefits set forth in Section 4.2 of this
Agreement): (i) the Company shall terminate the Executive's employment without
Cause, or (ii) the Executive shall terminate employment with the Company for
Good Reason, the Executive shall be entitled to the payment of the benefits
provided below as of the Date of Termination:
4.1 (a) Accrued Obligations. Within thirty (30) days after the Date of
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Termination, the Company shall pay to the Executive the sum of (1) the
Executive's Annual Base Salary through the Date of Termination to the
extent not previously paid, (2) the accrued benefit payable to the
Executive under any deferred compensation plan, program or arrangement
in which the Executive is a participant subject to the computation of
benefits provisions of such plan, program or arrangement, and (3) any
accrued vacation pay; in each case to the extent not previously paid
(the "Accrued Obligation").
In addition, on the date that Incentive Bonuses are paid to other
peer executives for the year in which the Executive's employment is
terminated, the Executive will be paid an amount equal to the product
of the Current Target Bonus multiplied by a fraction, the numerator of
which is the number of days during the fiscal year for which the
Incentive Bonus is paid prior to the Date of Termination and
denominator of which is 365. For purposes of this Agreement, the term
"Current Target Bonus" means the Incentive Bonus that would have been
paid to the Executive for the fiscal year in which the termination of
employment occurred, if the Executive's employment had not been so
terminated and the Executive had earned 100% of the Incentive Bonus
that he could have earned for that year.
4.1 (b) Annual Base Salary and Target Bonus Continuation. For the
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remainder of the Employment Period, the Company shall pay to the
Executive, the Executive's then-current Annual Base Salary and Current
Target Bonus as would have been paid to the Executive had the
Executive
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remained in the Company's employ throughout the Employment Period;
provided that in all cases the Executive shall receive, at minimum,
the then-current Annual Base Salary and Current Target Bonus for the
remainder of the Employment Period, or for a period beginning on the
Date of Termination and ending two years thereafter, whichever is
longer. The Company at any time may elect to pay the balance of such
payments then remaining in a lump sum, in which case the total of such
payments shall be discounted to present value on the basis of the
applicable Federal short-term monthly rate as determined according to
Code Section 1274 (s) for the month in which the Executive's Date of
Termination occurred.
4.1 (c) Medical and Health Benefit Continuation. For a period of two
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years beginning on the Date of Termination, or such longer period as
any plan, program, practice or policy may provide, the Company shall
continue medical and health benefits to the Executive and/or the
Executive's family at least equal to those which would have been
provided to them in accordance with the plans, programs, practices and
policies described in Section 2.4 (d) if the Executive's employment
had not been terminated, in accordance with the plans, practices,
programs or policies of the Company as those provided generally to
other peer executives and their families; provided, however, that if
the Executive becomes re-employed with another employer and is
eligible to receive medical or health benefits under another
employer-provided plan, the medical and health benefits described
herein shall be secondary to those provided under such other plan
during such applicable period of eligibility. In the event Executive
is able to obtain medical and health care coverage from a third party
for the duration of such coverage period that is at least as good in
all material respects as that described in the immediately preceding
sentence, Executive agrees to accept, in lieu of such Company provided
medical and health benefits, a lump sum cash payment in an amount
equal in value to the entire cost to Executive on an after-tax basis
of such alternate medical and health care coverage.
4.1 (d) Other Benefits. To the extent not previously paid or provided,
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the Company shall timely pay or provide to the Executive and/or the
Executive's family any other amounts or benefits required to be paid
or provided for which the Executive and/or the Executive's family is
eligible to receive pursuant to this Agreement and under any plan,
program, policy or practice or contract or agreement of the Company as
those provided generally to other peer executives and their families
("Other Benefits").
4.2 BENEFITS UPON TERMINATION IN CONNECTION WITH A TRIGGERING
TRANSACTION. If (a) a Triggering Transaction occurs during the Employment Period
and within three years after the Triggering Transaction Date (i) the Company
shall terminate the Executive's employment without Cause, or (ii) the Executive
shall terminate employment with the Company for Good Reason, or alternatively,
(b) if one of the above-
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described terminations of employment occurs within the six-month period prior to
the earlier of (i) a Triggering Transaction or (ii) the execution of a
definitive agreement or contract that eventually results in a Triggering
Transaction, then the Executive shall become entitled to the payment of the
benefits as provided below as of either (y) the Date of Termination, in the case
where the sequence of the requisite events is as set forth in subsection (a)
above or (z) the Triggering Transaction Date, in the case where the sequence of
the requisite events occurred as set forth in subsection (b) above (the relevant
date for purposes of entitlement to the benefits set forth in this Section 4.2
is hereinafter referred to as the "Entitlement Date"):
4.2 (a) Accrued Obligations. Within thirty (30) days after the
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Entitlement Date, the Company shall pay to the Executive the Accrued
Obligation.
In addition, on the date that Incentive Bonuses are paid for the year
in which the Executive's employment is terminated, the Executive will be
paid an amount equal to the product of the Current Target Bonus multiplied
by a fraction, the numerator of which is the number of days during the
fiscal year for which the Incentive Bonus is paid prior to the Date of
Termination and the denominator of which is 365.
4.2 (b) Severance Amount. Within thirty (30) days after the
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Entitlement Date, the Company shall pay to the Executive as liquidated
damages severance pay in a lump sum, in cash, an amount equal to 2.99
times an amount equal to his then-current Annual Base Salary and
Current Target Bonus.
4.2 (c) Stock Options. To the extent not otherwise provided for under
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the terms of the Company's stock option plans or the Executive's stock
option agreements, all stock options held by the Executive that have
not expired in accordance with their respective terms shall vest and
become fully exercisable as of the Entitlement Date.
4.2 (d) Other Benefits. To the extent not previously paid or provided,
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the Company shall timely pay or provide to the Executive and/or the
Executive's family any Other Benefits required to be paid or provided
for which the Executive and/or the Executive's family is eligible to
receive pursuant to this Agreement and under any plan, program, policy
or practice or contract or agreement of the Company to be implemented
by the Company during the term of this Agreement, such as deferred
compensation or retirement plans.
4.2 (e)Excess Parachute Payment. Anything in this Agreement to the
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contrary notwithstanding, in the event that it shall be determined
that any payment or distribution by the Company to or
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for the benefit of Executive (whether paid or payable or
distributed or distributable pursuant to the terms of this
Agreement or otherwise but determined without regard to any
additional payments required under this Section 4.2 (e) (a
"Payment") would be subject to the excise tax imposed by Code
Section 4999 (or any successor provision) or any interest or
penalties are incurred by the Executive with respect to such
excise tax (such excise tax, together with any such interest and
penalties, are hereinafter collectively referred to as the
"Excise Tax"), then the Executive shall be entitled to receive an
additional payment (a "Gross-up Payment:) in an amount such that
after payment by the Executive of all taxes (including any
interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any interest
or penalties imposed with respect thereto) and Excise Tax imposed
upon the Gross-Up Payment, the Executive retains an amount of the
Gross-Up Payment on an after-tax basis equal to the Excise Tax
imposed upon the Payment.
The Executive shall notify the Company in writing of any claim by
the Internal Revenue Service that, if successful, would require
the payment by the Company of the Gross-Up Payment. Such
notification shall be given as soon as practicable but no later
than thirty (30) business days after the Executive is informed in
writing of such claim by the Internal Revenue Service and the
notification shall apprise the Company of the nature of the claim
and the date on which such claim is required to be paid. The
Executive shall not pay such claim prior to the expiration of a
thirty (30) day period following the date on which the Executive
has given such notification to the Company (or such shorter
period ending on the date that any payment of taxes with respect
to such claim is required). If the Company notifies the Executive
in writing prior to the expiration of such period that it desires
to contest such claim, the Executive shall cooperate with the
Company in so contesting; provided, however, that the Company
shall bear and pay all costs and expenses, (including additional
interest and penalties) incurred in connection with such contest,
on an after-tax basis to the Executive.
4.3 DEATH. If the Executive's employment is terminated by reason of
the Executive's death during the employment Period (either prior or subsequent
to a Triggering Transaction), this Agreement shall terminate without further
obligations to the Executive's legal representatives under this Agreement, other
than for (i) payment of Accrued Obligations (as defined in Section 4.1 (a))
(which shall be paid to the Executive's estate or beneficiary, as applicable, in
a lump sum in cash within thirty (30) days of the Date of Termination) and (ii)
the timely payment or provision of Other Benefits (as defined in Section
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4.1 (d)), including death benefits pursuant to the terms of any plan, policy, or
arrangement of the Company.
4.4 DISABILITY. If the Executive's employment is terminated by reason
of the Executive's Disability during the Employment Period (either prior or
subsequent to a Triggering Transaction), this Agreement shall terminate without
further obligations to the Executive, other than for (i) payment of Accrued
Obligations as defined in Section 4.1 (a)) which shall be paid to the Executive
in a lump sum in cash within thirty (30) days of the Date of Termination) and
(ii) the timely payment or provision of Other Benefits (as defined in Section
4.1 (d)) including Disability benefits pursuant to the terms of any plan, policy
or arrangement of the Company.
4.5 TERMINATION FOR CAUSE; OTHER THAN GOOD REASON. If the Executive's
employment shall be terminated for Cause during the Employment Period (either
prior or subsequent to a Triggering Transaction), this Agreement shall terminate
without further obligations to the Executive other than the obligations to pay
to the Executive his Accrued Compensation (as defined in this Section). If the
Executive terminates employment with the Company during the Employment Period,
(excluding a termination for Good Reason), this Agreement shall terminate
without further obligations to the Executive, other than for the payment of
Accrued Compensation (as defined in this Section) and the timely payment or
provision of Other Benefits (as defined in Section 4.1 (d)). In such case, all
Accrued Compensation shall be paid to the Executive in a lump sum in cash within
thirty (30) days of the Date of Termination.
For the purpose of this Section, the term "Accrued Compensation" means
the sum of (i) the Executive's Annual Base Salary through the Date of
Termination to the extent not previously paid, (ii) any compensation previously
deferred by the Executive (together with any accrued interest or earnings
thereon), and (iii) any accrued vacation pay in each case to the extent not
previously paid.
4.6 NON-EXCLUSIVITY OF RIGHTS; SUPERSESSION OF CERTAIN BENEFITS.
Except as provided in Section 4.1 (c) and in this Section 4.6, nothing in this
Agreement shall prevent or limit the Executive's continuing or future
participation in any plan, program, policy or practice provided by the Company
and for which the Executive may qualify, nor shall anything herein limit or
otherwise affect such rights as the Executive may have under any contract or
agreement with the Company. Amounts which are vested benefits of which the
Executive is otherwise entitled to receive under any plan, policy, practice or
program of, or any contract or agreement with, the Company at or subsequent to
the Date of Termination, shall be payable in accordance with such plan, policy,
practice or program or contract or agreement except as explicitly modified by
this Agreement.
4.7 FULL SETTLEMENT. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against the
Executive or others. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation
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of the amounts payable to the Executive under any of the provisions of this
Agreement and, except as provided in Sections 4.1 (c), such amounts shall not be
reduced whether or not the Executive obtains other employment. In the event of
and after the occurrence of a Triggering Transaction, the Company agrees to pay
promptly as incurred, to the full extent permitted by law, all legal fees and
expenses which the Executive may reasonably incur as a result of any contest
(regardless of the outcome thereof) by the Company, the Executive or others of
the validity or enforceability of, or liability under, any provision of this
Agreement or any guarantee of performance thereof (including as a result of any
contest by the Executive regarding the amount of any payment pursuant to this
Agreement), plus in each case interest on any delayed payment at the applicable
Federal rate provided for in Code Section 7872 (f) (2) (A).
4.8 RESOLUTION OF DISPUTES. If there shall be any dispute between the
Company and the Executive (i) in the event of any termination of the Executive's
employment by the Company, whether such termination was for Cause, or (ii) in
the event of any termination of employment by the Executive, whether Good Reason
existed, then, unless and until there is a final, non-appealable judgment by a
court of competent jurisdiction declaring that such termination was for Cause or
that the determination by the Executive of the existence of Good Reason was not
made in good faith, the Company shall pay all amounts, and provide all benefits,
to the Executive and/or the Executive's family or other beneficiaries, as the
case may be, that the Company would be required to pay or provide pursuant to
Section 4.1 as though such termination were by the Company without Cause or by
the Executive with Good Reason; provided, however, that the Company shall not be
required to pay any disputed amounts pursuant to this Section except upon
receipt of an undertaking by or on behalf of the Executive to repay all such
amounts to which the Executive is ultimately adjudged by such court not to be
entitled.
SECTION 5: NON-COMPETITION.
5.1 NON-COMPETE AGREEMENT
5.1(a) It is agreed that during the period beginning on the date
the Term of this Agreement expires and ending two (2) years
thereafter, the Executive shall not, without prior written
approval of the Board, become an officer, employee, agent,
partner, consultant, beneficial/owner, agent, investor, or
director or any business enterprise in substantial direct
competition (as defined in Section 5.1 (b)) with the Company;
provided that, if the Executive is terminated by the Company
without Cause or if the Executive terminates his employment for
Good Reason, then he will not be subject to the restrictions of
this Section.
5.1 (b) For purposes of Section 5.1, a business enterprise with
which the Executive becomes associated as an officer, employee,
agent, partner, consultant, beneficial/owner, agent, investor or
director shall be considered in substantial direct competition,
if such entity competes with the Company in any business in which
the Company is engaged and is within the Company's market area as
of the date that the Employment Period expires.
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5.1 (c) The above constraint shall not prevent the Executive from
making passive investments, not to exceed five percent (5%), in
any enterprise.
5.1 (d) The Executive agrees that the foregoing restrictions, in
the absence of a Triggering Transaction, are reasonable and may
not prevent the Executive from earning a livelihood, and further
more, if any court of competent jurisdiction deems any of the
provisions of the foregoing invalid, this Agreement shall be
enforced to the full extent that such other provisions are valid
and such court may modify such restrictions to afford the Company
the maximum applicable protection permitted under the law.
5.1(e) Should Executive be adjudicated by a court of competent
jurisdiction to be in violation of this Section 5.1, all amounts
owed Executive pursuant to this Agreement shall be forfeited, and
the Company shall be entitled to injunctive or such other
equitable relief as is necessary to restrain Executive's
breaching conduct.
5.2 CONFIDENTIAL INFORMATION. The Executive shall hold in a fiduciary
capacity for the benefit of the Company all secret or confidential information,
knowledge or data relating to the Company or any of its affiliated companies,
and their respective businesses, which shall have been obtained by the Executive
during the Executive's employment by the Company and which shall not be or
become public knowledge (other than by acts by the Executive or representatives
of the Executive in violation of this Agreement). After termination of the
Executive's employment with the Company, the Executive shall not, without the
prior written consent of the Company, or as may otherwise be required by law or
legal process, communicate or divulge any such information, knowledge or data to
anyone other than the Company and those designated by it. In no event shall an
asserted violation of the provisions of this Section constitute a basis for
deferring or withholding any amounts otherwise payable to the Executive under
this Agreement.
SECTIONS 6: SUCCESSORS.
6.1 SUCCESSORS OF EXECUTIVE. This Agreement is personal to the
Executive and , without the prior written consent of the Company, the rights
(but not the obligations) shall not be assignable by the Executive otherwise
than by will or the laws of descent and distribution. This Agreement shall inure
to the benefit of and be enforceable by the Executive's legal representatives.
6.2 SUCCESSORS OF COMPANY. The Company will require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. Failure of the Company to obtain such agreement prior to the
effectiveness of any such succession shall be a breach of this Agreement and
shall entitle the Executive to terminate the Agreement at his option on or after
the Triggering Transaction Date for Good Reason. As used in this Agreement,
"Company" shall
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mean the Company as hereinbefore defined and any successor to its business
and/or assets which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
SECTION 7: MISCELLANEOUS.
7.1 OTHER AGREEMENTS. The Board may, from time to time, in the future,
provide other incentive programs and bonus arrangements to the Executive with
respect to the occurrence of a Triggering Event that will be in addition to the
benefits required to be paid in the designated circumstances in connection with
the occurrence of a Triggering Transaction. Such additional incentive programs
and/or bonus arrangements will affect or abrogate the benefits to be paid under
this Agreement only in the manner and to the extent explicitly agreed to by the
Executive in any such subsequent program or arrangement.
7.2 NOTICE. For purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by certified or
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses as set forth below; provided that all notices to the
Company shall be directed to the attention of the Chairman of the Board, or to
such other address as one party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be effective
only upon receipt.
Notice to Executive:
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Christopher J. Ryan
136 West Bayberry Road
Islip, NY 11751
Notice to Company:
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Lakeland Industries, Inc.
711-2 Koehler Ave.
Ronkonkoma, NY 11779
7.3 VALIDITY. The invalidity or unenforceability of any provisions of
this Agreement shall not affect the validity or enforce ability of any other
provision of this Agreement.
7.4 WAIVER. The Executive's or the Company's failure to insist upon
strict compliance with any provision hereof or any other provision of this
Agreement or the failure to assert any right the Executive or the Company may
have hereunder, including, without limitation, the right of the Executive to
terminate employment for Good Reason pursuant to Section 3.4 shall not be deemed
to be a waiver of such provision or right or any other provision or right of
this Agreement.
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IN WITNESS WHEREOF, the Executive and, the Company, pursuant to the
authorization from its Board, have caused this Agreement to be executed in its
name on its behalf, all as of the day and year first above written.
By: /s/Christopher J. Ryan
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Christopher J. Ryan
Members BOD Compensation Committee
By: /s/Eric O. Hallman
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Eric O. Hallman
By: /s/John J. Collins
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John J. Collins
By: /s/ Walter J. Raleigh
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Walter J. Raleigh